State eminent domain laws tip balance toward Vt. Gas

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Posted on February 24, 2014 |

AN SIGN STANDS in the yard of Jane and Nathan Palmer of Monkton, who are fighting to keep a natural gas pipeline from being built on their property. Independent photo/Zach Despart

ADDISON COUNTY — If Vermont Gas Systems does move forward with eminent domain proceedings against Addison County landowners to secure necessary easements to build its proposed natural gas pipeline, it will have both state statute and recent precedents on its side.

The Canadian-owned utility sent letters to nine Monkton homes last month stating that if an agreement on a right-of-way easement could not be reached, the utility would have no choice but to begin the process of eminent domain.

Eminent domain is the process by which a government seizes private land for public use. It is enshrined in the Fifth Amendment to the U.S. Constitution, which mandates that the government pay landowners just compensation for property it appropriates.

The basis for Vermont’s eminent domain law can be found in the state constitution. Chapter I, Section II states that private property is subservient to public uses, provided that “whenever any particular man’s property is taken for the use of the public, the owner ought to receive an equivalent in money.”

In its 49-year history, Vermont Gas has never acquired land through eminent domain, and has said that it does not want to use this approach in Monkton. However, since several landowners have said they will not negotiate with the utility under any circumstances, it seems increasingly likely that Vermont Gas will have no choice.

The state’s specific eminent domain laws are codified in Title 30 of the Vermont Statutes. The Public Service Board, a three-member quasi-judicial panel that supervises the state’s utilities, oversees eminent domain proceedings. Section 110 of Title 30 gives utilities regulated by the Public Service Board, such as Vermont Gas, the right to condemn property needed to provide service to the public, provided that the utility adheres to several statutes.

Steps in the process and important factors to consider if Vermont Gas must pursue eminent domain proceedings against landowners along the pipeline route include:

• The company must file a petition with the Public Service Board and Public Service Department. In it, the utility must explain why it was unable to secure the necessary easements without the use of eminent domain, and why securing the land is necessary for the project.

• The Public Service Board will then schedule two hearings, which the landowners that are subject to the proceeding are entitled to attend. In the first hearing, the Public Service Board determines if the land seizure is necessary. In the second, the Board decides what compensation landowners will receive.

• In order to prove the necessity of the land acquisition, Vermont Gas would have to prove that the project will benefit the public, and not hinder regional development or scenic preservation.

• The Public Service Board in December granted a Certificate of Public Good for Phase I of the project, a 43-mile section of pipeline from Colchester to Middlebury. The 157-page ruling states that the board believes the pipeline can be built without “undue adverse impacts” on the environment, and without endangering the safety of Vermonters. This prior approval conceivably lessens the burden Vermont Gas would have to meet in eminent domain proceedings, and places the onus on landowners, who must prove that the project is not in the public good.

• The Public Service Board’s findings in the necessity hearing are directly appealable to the Supreme Court. Findings in the compensation hearing must first be appealed to the Superior Court of the county in which the action originated. Landowners can demand the Superior Court appeal be heard by a jury. The final recourse for determining compensation is the Supreme Court.

• If Vermont Gas does initiate eminent domain proceedings, either the utility or landowners can request that similar cases be heard together. The Public Service Board has the authority on consolidating cases together, and can also do so on its own authority.

During the eminent domain proceedings related to the Northwest Reliability Project, the Public Service Board consolidated many of the eminent domain proceedings. The Vermont Electric Power Company (VELCO) used the process to successfully secure the right-of-way easements it needed to construct a 35.5-mile transmission line from West Rutland to New Haven.

The Public Service Board presided over 21 eminent domain proceedings related to the Northwest Reliability Project between 2005-2008. VELCO withdrew condemnation petitions in 11 of those cases after it reached settlements with landowners out of court. In five cases, the Public Service Board ruled in favor of VELCO and awarded compensation to landowners. In one case, VELCO withdrew its petition because it moved the proposed electric line to a different property. In no instance did the Public Service Board rule that the utility was not entitled to the land it sought. The dockets from the remaining four cases could not immediately be located.

Not only have landowners been historically unsuccessful in eminent domain proceedings, they are also unlikely to receive compensation for attorneys’ fees, should they retain counsel to represent them.

In 2009, a Shelburne real estate company appealed to the Supreme Court after the Public Service Board refused to award the company $45,000 in attorneys’ fees it spent fighting an eminent domain proceeding related to the Northwest Reliability Project. The court affirmed the board’s decision, finding that compensation for attorneys’ fees is not included in the “just compensation” required of eminent domain.

JUST COMPENSATION

While landowners may not prevail in an eminent domain proceeding, they are entitled to seek compensation based on multiple criteria. Section 112 of Title 30 states that landowners shall be compensated for both the current value of the property and “impairment to the value of the remaining property or rights of the owner, and consequential damages.”

Monkton landowners have said that compensation for devalued property is an important issue during their negotiations with Vermont Gas. Selina Peyser, whose property is appraised by the town at $889,000, said she fears her estate will become unsellable if the pipeline is built. Vermont Gas offered her $5,600 to use 1.2 acres of her property.

While utilities are often successful in eminent domain proceedings, there remains the potential for lengthy appeals during the condemnation process. The Grice family of New Haven in 2005 rejected an offer from VELCO to use part of their property for the Northwest Reliability Project. The utility began the eminent domain process, which lasted until 2008, when the Supreme Court ruled in favor of VELCO. The court also denied the Grices’ request to be compensated for attorneys’ fees and the cost of an expert witness.

Vermont Gas has said that the company hopes to begin construction on the pipeline as early as this summer.